The results for Q1 2025 point to the structural nature of the factors driving EBITDA growth: a premise of quality and repeatable performance for the future. On top of solid operating performance also came the positive contribution from a significant reduction in net financial expenses, which brought Net Profit to 153.7 million euro, an increase of 10.6 million compared to Q1 2024.
In terms of Total Shareholder Return offered, Hera thus continues to fully deliver on the commitments made in the 2024-2028 Business Plan, with a dividend yield of 4.4% adding up to an Earnings per Share progress of 7.4%.
In the quarter, Hera generated cash in excess of the needs to cover working capital and investments, resulting in a decrease in Net Financial Debt of 67 million euro, which translated into a further compression of leverage, now equal to 2.45 times, i.e. the lowest level over the last 20 years.
Therefore, financial flexibility remains intact, enabling the Group to use it in the event of further growth opportunities that have prerequisites to strengthen value creation.
Dear Shareholders,
First quarter 2025 results confirm Hera’s virtually zero exposure to the risk of commodity fluctuation and a growth in operations that is being led increasingly by structural drivers.
The high quality of structural growth,
which compensates for the lack of contributions
from temporary opportunities, thus provides a solid basis
for the value creation process set out in the Business Plan.
In Q1 2025, the 7.4% progress in Net Profit after Minorities was certainly driven by the significant drop in net financial charges, by more than 18 million, but relies, upstream, on a resilient operating performance, which is all the more appreciable when considering its recurring nature.
The 0.2% increase at EBITDA, up to 418 million euro, must be considered a very good result
When examining the factors underlying EBITDA performance, two reassuring elements stand out. On the one hand, the fact that all businesses in the multi-utility portfolio made a positive contribution to structural growth; on the other hand, the evidence that the progress achieved in the various operating areas with activities of a recurring nature succeeded in more than offsetting the lack of results from non-recurring activities – specifically, roughly 26 million euro achieved in Q1 2024 through temporary opportunities, mainly seized in the Last Resort markets.
The elimination of this non-recurring
amount leads us to consider that the
structural EBITDA growth over Q1 2024
has reached a rate of 7%.
The multi-utility model allows Hera to benefit from a diversified set of drivers of Group EBITDA
The incremental contribution made by Networks in the quarter just ended was the largest, worth around 16 million euro: a reflection of the benefits arising from the adjustment of tariffs to the new macroeconomic scenario, but also of the significant investments that Hera has decided to focus on these businesses. The aim is to strengthen and make the Networks infrastructure increasingly high-performing and resilient, with positive effects in terms of expanding the Regulatory Asset Base and gaining new operational efficiencies – elements rewarded by the regulatory framework. In the Waste area, the EBITDA growth of 2 million, in a weak economic growth context, reflects the competitive strength of Hera, which succeeds in successfully updating prices above inflation and offering a range of complementary services that are highly valued by public and private customers. Lastly, in the Energy area, taking the 26-million-euro non-recurring EBITDA of Q1 2024 apart, the recurring component increased by roughly 9 million. This trend confirms, on the one hand, Hera’s ability to provide flexible contractual solutions based on the needs of individual users and, on the other hand, its success in leveraging the customer base acquired through the Gradual Protection Services tender, as proven by the customer base solidly anchored at 4.6 million at the end of March 2025.
Solid operating performance confirmed also at EBIT level
The 0.5% increase of EBIT, at a rate slightly higher than that of 0.2% of EBITDA, reflects the combined impact of two factors: the D&A increase, resulting from high investments made in the last few years, which was offset by lower credit risk provisioning, in a normalizing external context.
Effective performance both of operations and financial management fuelled value creation
Due to the lower absorption in terms of net financial charges, the progress achieved at EBIT level translated into a 7% increase in Earnings per Share.
Such a result, considered together with a 4.4% dividend yield based on 2024 year-end price, confirms that Hera is offering a Total Shareholder Return fully meeting Plan’s commitments.
The dynamic of returns, which are clearly
expanding, shows that the growth Hera is delivering
is not only a growth in size, but also a growth in value creation.
In Q1 2025, Return on Investment stood at a double-digit level, having reached 10.3%, compared to 9.5% of Q1 2024. Likewise, Return on Equity posted a 70-bps increase, moving from 10.3% of Q1 2024 up to 11.0%.
Strong cash generation drove further deleveraging while investments continued to fuel future growth
In Q1 2025, we recorded an excess cash generation of 66.8 million euro compared to the needs of funding working capital, provisions and capex, which overall amounted to 187.2 million euro: that allowed net financial debt to drop to 3,896.9 million euro as at 31 March 2025, taking the leverage down to 2.45 times.
The Debt-to-EBITDA ratio thus
reached the lowest level over the last 20 years.
It remains true that this level of leverage, which is well below the 3x we have identified as a physiological level to maintain a low risk profile, represents an opportunity for us. Although the external scenario burdened by uncertainty does not provide favourable ground for new M&A transactions in the short-term, we still know that we can remain watchful, counting on considerable financial flexibility.
An effective strategy execution remains the premise to offer high TSR
Following this review of first-quarter performance, which provided us with strong validation and reassurance of being fully on track with the Plan, we move forward relentlessly, guided by the goal of delivering the best possible returns to our shareholders.
The financial markets showed their appreciation not only for the magnitude but also for the structural quality of Hera’s financial performance, as proven by the rise in share prices of more than 20% since the beginning of the year, in an overall context of great uncertainty and volatility.
In addition to the benefit of stock capital gains, our shareholders will soon combine the benefit of receiving a dividend per share of 15-euro cents on the next 25th June, an increase of 7% compared to the previous year, as resolved at the last Shareholders’ Meeting.
Therefore, we continue to execute the Business Plan
by remaining focused on clear targets, at the
same time encouraged by the quality of the results
the financial year started with and the appreciation
that the stock market showed for the path that Hera has taken.
